WASHINGTON -- Federal regulators directed the El Paso Corp. on Thursday to change the way it divides pipeline space to assure more natural gas flows into California, where demand for the fuel is growing.

The Federal Energy Regulatory Commission ordered the company, one of the Southwest's largest transporters of natural gas, to renegotiate shipping contracts to remove preferences that for many years have been granted to shippers of gas into Arizona and New Mexico.

"El Paso fully supporters FERC's efforts to bring a resolution to this customer controversy," Patricia Shelton, president of El Paso Natural Gas Co., said in a statement issued at the parent company's Houston headquarters.

"Today's decision will put all shippers on equal contractual footing with regard to (pipeline) capacity rights," Shelton said. She said the change was "not expected to have any adverse economic impact" on the company.

The commission also rejected a claim by California that power producers had violated the law by not reporting transactions in 2000 and was owed an additional $2.8 billion in refunds. The commission still is considering another California claim for $8.9 billion in refunds.

The commission said the quarterly reports that energy traders were required to file on transactions were sufficient under the law and that pre-transaction filings -- as California had claimed should have been made -- would have amounted to a return to strict price controls.

California Gov. Gray Davis, in a statement from Sacramento, said he was disappointed about the refunds but welcomed the directive to El Paso.

"FERC has finally decided to take action on El Paso Natural Gas' stranglehold on the California natural gas market," said Davis.